132. Personal Note Prepared by the Deputy Secretary of State (Dam)1
FRIDAY, JANUARY 6, 1984
I had a longish meeting with the Ambassador of Algeria today,2 who came in to protest the cancellation by Trunkline, a natural gas corporation, of a natural gas contract with Sonatrach, an Algerian public corporation. This is a contract which involved very large sums of foreign exchange for Algeria, and the cancellation came as a major blow to Algeria. The U.S. Government had not been informed prior to the cancellation by Trunkline,3 which apparently is in very serious financial straits because of the high price of the Algerian contract compared to other sources of natural gas in the U.S. Midwest. I explained to Yaker how the United States was not in a position to force a U.S. corporation to live up to its obligations, nor was it able to guarantee, with money or otherwise, the obligations of this foreign corporation. I also mentioned the fact, without being explicit about it, that when the shoe had been on the other foot and Algeria had been unilaterally increasing the price of natural gas in its contracts with the United States, Algeria had been delighted to obtain the additional money and had not been concerned about compensation to the United States.
[Omitted here is material unrelated to Algeria.]
- Source: Department of State, Executive Secretariat, S/S–I Records: Deputy Secretary Dam’s Official Files, Lot 85D308, Personal Notes of Deputy Secretary—Kenneth W. Dam—Oct. 1983—Sept. 1984. No classification marking. Dictated by Dam on January 6.↩
- In telegram 5072 to Algiers, January 7, the Department informed the Embassy that during this January 6 meeting, Yaker told Dam “the GOA could not accept Trunkline’s suspension of LNG liftings, that Algeria expected the USG to help develop ‘solutions’ to the suspension, and that the Trunkline situation held ‘serious political implications’ for U.S.-Algerian relations. Citing recent improvements in bilateral relations, Yaker stated the GOA did not want a ‘crisis’ in relations but would consider ‘other courses of action’ if the Trunkline contract were maintained.” Dam replied that “the U.S. legal system did not allow the administration to dictate actions to American companies involved in international transactions, suggested the GOA consider legal remedies to achieve its objectives in the Trunkline situation, and said the Department remained open to further discussions on the matter if the GOA desired.” (Department of State, Central Foreign Policy File, Electronic Telegrams, D840041–0049, D840012–0764)↩
- In telegram 363524 to Algiers, December 23, 1983, the Department transmitted the text of a memorandum of conversation of Hodel’s December 15 meeting with Yaker. During the meeting, Hodel “said that as soon as he learned about the Panhandle decision to suspend Algerian gas imports he called Minister Nabi” to explain that “this action by the company was totally unexpected. We wanted to make clear that the USG had not been involved in nor directed this action and that it was a private company action.” (Department of State, Central Foreign Policy File, Electronic Telegrams, D830760–0434)↩